- The Washington Times - Saturday, July 25, 2009

SACRAMENTO, Calif. | Lawmakers on Friday approved a complex package of spending cuts, local government raids and accounting maneuvers to fill California’s gigantic budget deficit, providing hope that the state might begin a slow climb out of a deep financial hole.

The legislative package of 31 bills, with final passage coming in the Assembly after an all-night session, was similar to the deal announced earlier this week by Gov. Arnold Schwarzenegger and legislative leaders from both parties.

But the Assembly rejected two of the most controversial measures: a plan to take about $1 billion in transportation funding from local governments and allowing oil drilling off the California coast for the first time in 40 years, which was to have brought in $100 million this fiscal year.

The loss of $1.1 billion from the budget package means Mr. Schwarzenegger will have to use his authority to make even deeper cuts to close the gap.

The measures passed by the Legislature technically amounted to a revision of a 2009-10 fiscal year budget that lawmakers passed in February during an emergency session.

Since then, the state’s fiscal condition has grown more dire by the week, led by a dramatic drop in personal income tax revenue. The cash crisis has become so acute that California has been forced to send IOUs instead of payments to thousands of state contractors and was facing the prospect of being unable to fund pension contributions and pay employees by September.

While lawmakers agreed the deficit-closing plan was distasteful, most said they had little choice.

“There are no easy solutions to problems like this,” said Senate Republican Leader Dennis Hollingsworth.

The budget agreement will be felt in nearly every community of the nation’s most populous state. Cuts to public schools are expected to force teacher layoffs, more crowded classrooms and scaled-back offerings in art, music and sports. College students will pay hundreds of dollars more per year in fees, course offerings will shrink and tens of thousands of prospective students will be turned away.

Welfare, health care programs for low-income families, and in-home services for the disabled, elderly and frail will be reduced. Nearly 40,000 will have their in-home support services terminated.

State Senate leader Darrell Steinberg, Sacramento Democrat, said he was pained by the cuts to public schools and health and human services programs. After his chamber passed the series of budget bills early Friday, some 12 hours after it began debate, he said he did not feel joy, but only relief.

“I think we did our job well and cut in a way that was as responsible as it could be,” he said.

Lawmakers debated the oil drilling measure for more than a half hour.

Assemblyman Pedro Nava, a Santa Barbara Democrat who has long opposed the project, said the governor appeared to be willing to hijack California’s future because of a budget crisis. He said the measure would “ignore solid public policy, set aside our values, put a price tag on the coast and put our environment at risk.”

Assemblyman Chuck DeVore, an Irvine Republicanl, said the oil drilling would bring billions into California’s coffers while ensuring the most modern and safe drilling technologies are used.

State officials had estimated the state would immediately receive $100 million and a combined $1.8 billion over the lifetime of the project. A competing oil company has estimated the reserve could be as large as 250 million barrels worth billions of dollars in today’s prices.

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